In a federal complaint filed in Fort Pierce, Florida on Thursday, lead plaintiff William Sacco claims AARP is collecting unconscionable commissions on insurance policies it sells in partnerships with co-defendants UnitedHealth Group Inc. and UnitedHealthcare Insurance Company.

Sacco, who is represented by Scott Bursor from Bursor & Fisher PA, claims that AARP refers to these commissions as “royalty” payments for the use of its intellectual property, and fails to disclose that they are collected by charging seniors and disabled individuals an additional amount over and above the insurance premium paid to UnitedHealthcare.

“Defendants’ motive to term a commission payment a “royalty” is two-fold: it allows AARP to avoid oversight by insurance regulators, and it allows AARP to avoid paying taxes on the income it generates through insurance sales,” Sacco says.

According to the complaint, AARP is violating the Florida Insurance Code because even though it does not have a license to operate as an insurance agent in Florida, it still acts as a “de facto agent” for UnitedHealth by selling and renewing “AARP Medigap” insurance policies in exchange for a 4.95 percent commission.

The complaint alleges that similar Medigap policies offered by other companies have lower costs, but AARP secretly charges its clients unlawful insurance agents’ commissions to maximize its profits.

“AARP earns substantial revenue through business partnerships with large insurance companies, like defendant UnitedHealth, to sell its own AARP-branded insurance policies,” the complaint says.

Sacco claims UnitedHealth is AARP’s largest business partner, and says that according to the organizations own 2010-2012 financial statements, 65 percent of its royalty income comes from the sale or renewal of UnitedHealth insurance products.

AARP’s program offers Medicare-related insurance such as Part D prescription drug insurance, Medicare Advantage and Medigap.

The complaint claims that any consumer who wants to purchase Medigap coverage from UnitedHealth needs to buy the AARP Medigap plan, and thus they are contributing to AARP’s illegal commissions without even knowing about it.

“In 2012, AARP generated $704 million in revenues from its so called royalties, which is nearly three times higher than income generated from membership dues, and makes up 52% of AARP’s 2012 total operating revenue,” the complaint says.

Sacco says that AARP and UnitedHealth are scheming and taking advantage of unsuspecting senior citizens who have placed their trust in them.

He is seeking compensatory damages on claims of conversion, unjust enrichment and fraudulent concealment.

Mark Bagley, a media relations representative for AARP, said that they are reviewing the lawsuit details, but that “it is immediately apparent that the allegations are meritless.”